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Honda Slashes Output Again -- But Boosts China

Honda Motor Co. said on Jan. 27 it would roll back production further in Japan and North America but step up output in China, where demand is still growing despite the global economic crisis. "We are planning to expand output capacity to respond to market needs," the spokesman said.

Output at the Dongfeng Honda Automobile Co. in China has steadily risen in recent years, producing more than 160,000 vehicles in calendar year 2008, up nearly 30% from the previous year. The company is hoping to raise output to full capacity of 240,000 vehicles, bringing Honda's total output in China to 650,000.

China's auto sector grew 6.7% in 2008. While outperforming developed nations, the rate was China's slowest in a decade and a sharp fall from 21.8% the year before.

Honda said it expected domestic production of roughly 1.15 million four-wheel vehicles in the year to March, just days after it lowered the target to 1.17 million.

Subsidiary Yachiyo Industry Co, which manufactures mini-vehicles for Honda, said it would not be renewing contracts for 500 temporary workers at the end of February due to the cutbacks.

As Honda announced the new production figures, some 100 temporary employees staged a demonstration outside the company's headquarters in Tokyo. Many of the demonstrators were Brazilians, who took advantage of a loophole in Japan's tight immigration laws to take work when the auto industry was booming but have been hit hard by job cuts.

Honda said it also expected to reduce output at its U.S. and Canadian factories by 29,000 vehicles to 1.26 million, down 14% from its earlier estimate.

Honda has delayed plans to boost output in Turkey and India and abruptly pulled out of Formula One racing.

Earlier this month it said it was cutting 3,100 temporary workers in Japan by the end of April.